Surplus Stocks Prevention and Design Changes
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Questions and Answers

What should happen to surplus stores that remain unsold or issued after twelve months?

  • They should be transferred to other departments.
  • They should be kept at their original book value.
  • They should be classified as scrap and the book value adjusted. (correct)
  • They should be sold at a discount.

What is the maximum stock allowed for ordinary stores in relation to issues during the year?

  • 50 percent of total issues. (correct)
  • 75 percent of total issues.
  • No limit is imposed.
  • 25 percent of total issues.

Which of the following factors is NOT responsible for overstocks of ordinary stores?

  • Contractual obligations on the basis of annual contracts.
  • Increased annual purchases based on previous year's consumption. (correct)
  • A decrease in consumer demand.
  • Larger returns from consuming departments than expected.

What should be the objective of every Controller of Stores concerning stock levels?

<p>To maintain stocks well within the 50 percent limit. (D)</p> Signup and view all the answers

How should the Surplus stock Section be organized in relation to the disposal of surplus stock?

<p>It should mirror the sales organization of a commercial concern. (A)</p> Signup and view all the answers

What should be included when preparing the copies of the form to be sent to the Controller of Stores?

<p>Only part A filled in with all copies (B)</p> Signup and view all the answers

What actions should be taken by the department concerned after receiving the information from the Controller of Stores?

<p>Prepare estimates of loss related to scrapping existing stocks (C)</p> Signup and view all the answers

What is the role of the Controller of Stores regarding the proposed changes?

<p>To regulate future purchases of the article concerned (A)</p> Signup and view all the answers

What should the Controller of Stores do if he disagrees with the consuming department regarding proposed change dates?

<p>Submit his reasons to the General Manager for a final decision (C)</p> Signup and view all the answers

What does the Controller of Stores need to check after submitting the estimates of loss?

<p>Confirm that other items are not incidentally involved (D)</p> Signup and view all the answers

What documentation must accompany the two copies of Form S. 2202 sent back to the Controller of Stores?

<p>Estimates of loss prepared by the department (C)</p> Signup and view all the answers

What decision must the Controller of Stores communicate to the department once he agrees on the change dates?

<p>The sanction of competent authority for losses involved in changes (B)</p> Signup and view all the answers

What is the primary role of the Survey Committee after inspection?

<p>To determine the classification and disposal of stores (B)</p> Signup and view all the answers

Who has the authority to reclassify stores as second-hand or scrap for items valued over Rs. 25,000?

<p>Controller of Stores with General Manager's sanction (C)</p> Signup and view all the answers

Which of the following is the maximum amount that a Depot Officer can reclassify an item without Survey Committee approval?

<p>Rs. 1,000 (B)</p> Signup and view all the answers

What must a Depot Officer ascertain before classifying an item costing up to Rs. 1,000 as dead surplus?

<p>User departments do not need it in the next two years (C)</p> Signup and view all the answers

Who nominates the Secretary of the Survey Committee?

<p>The General Manager (B)</p> Signup and view all the answers

What is the frequency of meetings for the Survey Committees?

<p>Not less than once every six months (B)</p> Signup and view all the answers

What procedures must be followed before selling scrap by private treaty?

<p>It must be recommended for sale by the Survey Committee (D)</p> Signup and view all the answers

Which officer can redelegate the powers given to the Controller of Stores for reclassifying items?

<p>Dy. Controller of Stores (C)</p> Signup and view all the answers

What limit applies to the reclassification of stores by the Controller of Stores?

<p>Rs. 25,000 (D)</p> Signup and view all the answers

What is specifically prohibited before an auction sale of articles in the depot?

<p>Survey Committee recommendation (D)</p> Signup and view all the answers

What is the primary criterion for declaring any items of stores as 'surplus' stock?

<p>They must not have been issued from stock for a period of two years. (B)</p> Signup and view all the answers

Which classification of surplus includes items anticipated to be used in the near future?

<p>Movable Surplus (B)</p> Signup and view all the answers

How long must an item go unissued to be classified as 'dead surplus'?

<p>24 months (A)</p> Signup and view all the answers

What is the role of a Survey Committee in determining the status of stores?

<p>To inspect items for deterioration, damages, and unserviceability. (A)</p> Signup and view all the answers

Which of the following items would NOT be classified as surplus?

<p>Spare parts for electrical machinery. (D)</p> Signup and view all the answers

What distinguishes 'movable surplus' from 'dead surplus'?

<p>Movable surplus is expected to be used shortly; dead surplus is not. (B)</p> Signup and view all the answers

Which of the following statements is true regarding emergency stores?

<p>They should not be classified as surplus even if unissued for two years. (A)</p> Signup and view all the answers

What is necessary for an item to qualify as 'dead surplus'?

<p>It must have been inspected by a Survey Committee. (C)</p> Signup and view all the answers

Which category of surplus includes items that have been issued for less than two years?

<p>Movable Surplus (C)</p> Signup and view all the answers

What is the primary purpose of the Survey Committee's report regarding surplus stocks?

<p>To provide recommendations on the disposal of obsolete items (B)</p> Signup and view all the answers

Which document outlines the procedure for recording the findings of the Survey Committee?

<p>Form No. S. 2227 (A)</p> Signup and view all the answers

Who is responsible for submitting the Survey Committee's report?

<p>The Depot Officer (D)</p> Signup and view all the answers

What aspect of the surplus stocks does the survey committee NOT document?

<p>Historical sales data (B)</p> Signup and view all the answers

What is required from members of the Survey Committee regarding the report?

<p>All copies of the list must be signed by all members (C)</p> Signup and view all the answers

Who is responsible for communicating the orders of the General Manager regarding surplus stocks?

<p>The Depot Officer (A)</p> Signup and view all the answers

In the context of the survey report, what needs to be done after the recommendations are made?

<p>Immediate actions are initiated to implement the recommendations (A)</p> Signup and view all the answers

What does each item in the survey report require after it has been evaluated?

<p>A recommendation on disposal method (D)</p> Signup and view all the answers

What role does the Controller of Stores play in relation to the Survey Committee's report?

<p>They review and act on all recommendations (B)</p> Signup and view all the answers

Which of the following must be included in the survey report for each item?

<p>Name of the department concerned with the item (D)</p> Signup and view all the answers

What should be included in the estimate when justifying the loss related to scrapping old standard materials?

<p>Justification for probable loss to the railway (C)</p> Signup and view all the answers

What must happen before the changes in stock management are implemented?

<p>A decision regarding the write-off of surplus (A)</p> Signup and view all the answers

Which statement accurately reflects the management of surplus stocks?

<p>Estimates for scrapping must accompany proposed changes in stock levels. (A)</p> Signup and view all the answers

What should the Controller of Stores consider when deciding the timing of stock changes?

<p>Possible financial losses from immediate changes (D)</p> Signup and view all the answers

What does the term 'movable surplus' refer to in stock management?

<p>Items that are anticipated to be used soon (C)</p> Signup and view all the answers

What action is required when stocks are exhausted according to stock management policies?

<p>An estimate for likely losses must be submitted. (D)</p> Signup and view all the answers

In relation to surplus stock management, what is the primary concern regarding old standard materials?

<p>Assessing the justification for scrapping them (B)</p> Signup and view all the answers

What action should the Stores Department take regarding new standards until final orders are received from the consuming department?

<p>Cease purchases of both new standards and existing articles. (B)</p> Signup and view all the answers

At what point should a financial statement for scrapping spare parts be prepared by the Stores Department?

<p>As soon as the details of spares to be scrapped are fixed. (D)</p> Signup and view all the answers

What should be included in the manuscript 'Advice to Write off spares' at the time of replacing or scrapping equipment?

<p>The full description of the rolling stock or machinery being replaced. (B)</p> Signup and view all the answers

What is the role of the Stores Department regarding existing spare parts when preparing for replacements?

<p>They must ascertain if spare parts can be used on similar equipment. (D)</p> Signup and view all the answers

Which financial aspect must be addressed when preparing for the replacement of old equipment?

<p>Prepare a financial statement for the loss incurred from scrapping parts. (C)</p> Signup and view all the answers

What signifies that spare parts may become obsolete during the preparation for replacement?

<p>Notification from the consuming departments of potential redundancy. (D)</p> Signup and view all the answers

Which of the following actions should the Stores Department avoid in terms of current articles before receiving final orders?

<p>Temporarily suspending operations in the Stores Department. (C)</p> Signup and view all the answers

When should the Stores Department refer to consuming departments in relation to surplus spares?

<p>Once budgets are being prepared for any replacements. (B)</p> Signup and view all the answers

What is the consequence if new standards are stocked before receiving final orders from the consuming department?

<p>Overstocking of outdated items may occur. (C)</p> Signup and view all the answers

What is the main characteristic of movable surplus items?

<p>Items that have not been issued for at least 24 months but may be utilized soon. (B)</p> Signup and view all the answers

Which of the following is a requirement for classifying an item as dead surplus?

<p>It must be inspected by a Survey Committee and declared as unutilizable. (B)</p> Signup and view all the answers

What type of items are classified as emergency stores?

<p>Items necessary to meet occasional emergencies that do not require renewal. (B)</p> Signup and view all the answers

Who has the responsibility to inspect items that may have deteriorated in value or become unserviceable?

<p>The Survey Committee. (C)</p> Signup and view all the answers

What is the threshold period for declaring items as surplus if they have not been issued?

<p>Two years. (C)</p> Signup and view all the answers

What should the Controller of Stores do if the railway is committed to the purchase of materials?

<p>Return a copy of the form indicating the rate at which the material will be taken into stock. (A)</p> Signup and view all the answers

Which scenario defines materials as not being surplus according to the Controller of Stores?

<p>Materials temporarily exceeding immediate requirements but can be issued soon. (D)</p> Signup and view all the answers

If the divisional officer accepts a loss from changes in design, what must he also obtain?

<p>Sanction from the competent authority for additional expenditure. (B)</p> Signup and view all the answers

How is surplus stock defined in the context of the Controller of Stores?

<p>Materials not issued for a long time and thus considered surplus. (D)</p> Signup and view all the answers

What action should the Controller of Stores take regarding arrangements if the railway is not committed to a purchase?

<p>Cancel the arrangements immediately and notify the indentor. (C)</p> Signup and view all the answers

What classification of surplus includes materials that are expected to be utilized in the near future?

<p>Movable surplus. (A)</p> Signup and view all the answers

What is a primary responsibility of the Controller of Stores when handling stock levels?

<p>To avoid any accumulation beyond ordinary requirements. (C)</p> Signup and view all the answers

Which of the following must be done before selling scrap through private treaty?

<p>Obtain approval from the Controller of Stores. (D)</p> Signup and view all the answers

What must accompany the copies of the form returned to the indentor through the divisional officer?

<p>An explanation of material valuation. (B)</p> Signup and view all the answers

What is essential for an item to be classified as 'dead surplus'?

<p>It must remain unissued for a set period. (C)</p> Signup and view all the answers

What should be done with spares if the old plant is transferred for use elsewhere?

<p>They should be kept in stock. (B)</p> Signup and view all the answers

How should the difference between original book value and scrap value be handled when spares are scrapped?

<p>It is debited to the estimate for replacement. (B)</p> Signup and view all the answers

What should the Controller of Stores do when new plant orders are placed?

<p>Fill in the probable date of arrival and inform the depot. (D)</p> Signup and view all the answers

What information must be included in the estimate for replacement?

<p>The value of spares or fittings currently in stock. (A)</p> Signup and view all the answers

What happens to spares when the old plant is scrapped and sent to the auction yard?

<p>They should normally be sent with the scrapped plant. (B)</p> Signup and view all the answers

When no further adjustment against the estimate is made after selling spares, what is necessary regarding the selling price?

<p>It does not matter if the selling price is above or below the scrap rate. (C)</p> Signup and view all the answers

What is the primary responsibility of the Controller of Stores upon receipt of new plant?

<p>Ensure spares for the replaced plant are disposed of correctly. (C)</p> Signup and view all the answers

What must the Controller of Stores return to the departmental officer after filling in the spares quantity and value?

<p>All copies of the form. (A)</p> Signup and view all the answers

What should be done with spares if they are deemed surplus but still hold value?

<p>Evaluate for potential future utility before disposal. (B)</p> Signup and view all the answers

Flashcards

Head of Department Approval

Formal approval process for writing off or reducing value of stock, starting with the Accounts Officer, Stores, to the General Manager.

Controller of Stores Role

Evaluates proposed stock write-offs/reductions, estimates potential losses of delayed standard implementation or stock scrapping, and considers material disposal options.

Estimate of Loss

Calculation of potential losses related to postponing a new standard introduction or scrapping existing stock.

Form S. 2202

A specific form used for reporting stock write-offs or value reductions, primarily a three part Form.

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Stock Write-off/Value Reduction

Action to decrease the value of unsaleable or outdated stock items, following a protocol.

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Standard Introduction Delay

Postponement of implementing a new standard due to existing stock.

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Material Disposal

Selling or transferring unsaleable inventory to other facilities to reduce losses.

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Surplus Stock

Railway stores that haven't been used for two years and are no longer needed for immediate use.

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Movable Surplus

Railway stores not issued for 24 months but expected to be used soon.

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Dead Surplus

Railway stores not issued for 24 months and not likely to be used for two years.

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Survey Committee

Committee that inspects railway stores to determine if they are "dead surplus".

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Emergency Stores

Items critical for emergencies, even if not used for a long time.

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Inspection Criteria (Survey Committee)

Items to assess for stores deterioration, damage, and obsolescence (unserviceable)

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Price Lists

Documents that list surplus and movable surplus items for potential future use

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24 Months

The timeframe, for determining if stores are considered to be movable surplus, or dead surplus.

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Essential prerequisite

Condition for items to be classified as "surplus stock" (not issued in 2 years).

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Dead Surplus Stores

Items in stock deemed unusable or obsolete, requiring reclassification and disposal.

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Reclassification

Changing an inventory item's status from usable to 'second-hand' or 'scrap' due to obsolescence or damage.

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Second-Hand Stores

Items in stock that are still usable but have diminished value due to wear or age.

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Scrap Stores

Items in stock that are completely unusable and have no value.

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General Manager's Approval

The highest authority needed for reclassifying or selling stock deemed 'Dead Surplus' or 'Scrap'.

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Controller of Stores

The person responsible for managing the overall stock inventory and overseeing reclassification decisions.

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Depot Officer

The local manager responsible for day-to-day stock management within a depot.

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Sale by Auction

Selling surplus stock to the highest bidder through a public bidding process.

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Sale by Private Treaty

Selling surplus stock directly to a specific buyer without public bidding.

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Ordinary Stores

General inventory items used regularly within a railway, excluding surplus, emergency, or special stock.

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Overstock Limit

Maximum allowable stock level for 'ordinary stores', typically capped at 50% of annual usage.

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Unanticipated Consumption Fall

Unexpected decrease in inventory usage, leading to potential overstocking issues.

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Annual Contract Estimates

Planning process to forecast yearly inventory requirements, taking into account potential factors like consumption fluctuations.

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Survey Sheet (Form S. 2227)

A standard form used to record details of surplus or obsolete inventory items, including descriptions, quantities, book value, reasons for surplus, and recommendations for disposal.

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Recommendation for Disposal

The decision made by the Survey Committee regarding the appropriate action for surplus or obsolete inventory, such as selling, scrapping, or transferring to another facility.

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General Manager's Sanction

Formal approval from the highest authority required for any decision regarding the disposal of surplus or obsolete inventory, ensuring accountability and proper procedures.

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Stores Accounts Officer

The individual responsible for managing the financial records of inventory, ensuring accurate accounting for surplus and obsolete stock disposal.

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Statutory Audit Officer

An independent expert who reviews and verifies the financial records of a company, including the disposal of surplus and obsolete inventory, ensuring transparency and adherence to regulations.

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Scrap Value

The estimated monetary value of a surplus or obsolete item that can be salvaged or recycled, taking into account the material and potential reuse.

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Loss Incurred

The financial loss calculated for surplus or obsolete inventory that cannot be sold or used, reflecting the total value that cannot be recovered.

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When does stock become Surplus?

When it hasn't been issued for 24 months.

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What happens to spare parts when a new plant arrives?

When a new plant arrives, the spare parts associated with the old plant are (a) transferred to the new plant, (b) sent to auction to be sold, or (c) kept in stock.

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Who is responsible for filling in the quantity and value of spares?

The Controller of Stores is responsible for filling in the quantity and value of spare parts in stock.

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What happens to spare parts when the old plant is scrapped?

When the old plant is scrapped and sent to the auction yard, the spare parts should normally be sent with it.

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What happens to spare parts when the old plant is transferred?

If the old plant is transferred to another location, the spares and fittings should be kept in stock.

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How is the loss on scrapped spare parts accounted for?

The difference between the original book value and the scrap value of spare parts should be debited to the estimate for the replacement of the rolling-stock, plant or machinery.

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What happens when scrapped spare parts are later sold?

If scrapped spare parts are later sold, no further adjustment against the estimate needs to be made, regardless of the selling price.

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What is the role of the Controller of Stores in managing spare parts?

The Controller of Stores manages the spare parts inventory, determines their value, and oversees their disposal when old equipment is replaced.

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What information does the Controller of Stores provide about new plant arrival?

The Controller of Stores provides the probable date of arrival for new plants and instructions for the disposal of the related spare parts.

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Surplus Spares

Spare parts for equipment that is being replaced or scrapped. The Stores Department needs to determine if these parts are obsolete or can be used on other equipment.

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Form No. S. 2209

A form used for reporting spares to be scrapped or written off that is sent to the Controller of Stores. It has three copies.

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Estimate Sanctioned

The official approval given to replace the old equipment, plant, or machinery. The Stores Department uses this to finalize the write-off of spares.

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Advice to Write-Off Spares

A document that lists spare parts that will become obsolete due to the replacement of equipment. The Stores Department sends this document to the Controller of Stores.

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Controller of Stores Role (Surplus Spares)

The Controller of Stores reviews the list of spare parts to be scrapped. They determine the value of the spares and estimate any financial losses.

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Total Value of Spares

The total estimated worth of all the spare parts that will be scrapped. This value is used to calculate any financial losses.

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Financial Statement

The Stores Department prepares a document showing the estimated financial losses involved in scrapping the spare parts. This helps the Controller of Stores understand the financial impact.

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Funds for Loss

The Stores Department calculates the amount of money that will be needed to cover the losses caused by scrapping the spare parts. This is included in the yearly budget.

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Stock Department's Responsibility

The Stores Department is responsible for evaluating and managing the disposal of spare parts, preparing the financial statement, and submitting it to the Controller of Stores.

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Study Notes

Surplus Stocks Prevention

  • Important changes in plant and equipment design, introduction of new standards, and scrapping of old plant contribute to surplus stock accumulation.
  • Procedure for keeping the Controller of Stores informed of obsolete stock, minimizing accumulation, and reducing administrative losses.
  • Departments proposing changes in design or standards must submit an "Advice of Change in Design/Standard" (Form S. 2202). They must get details of existing old-standard materials.
  • Prior to implementing a new standard, obtain details about already existing standard material in stock from the Controller of Stores.
  • The stock position of raw materials needed for the manufacturing of new items should also be included.
  • The Controller of Stores should inform concerning the change and regulate subsequent purchases.

Change in Design and Standards

  • Consuming departments should submit "Advice of Change" (Form S. 2202) to the Controller of Stores, including:
    • Current stock quantities
    • Quantities ordered
    • Total value of the material
    • Average monthly consumption (based on previous year's data)
    • Other consumers of the material
    • Any remarks or relevant additional details.
  • The document should contain information about any losses associated with the proposed change.

Surplus Spares from Replacements

  • When rolling stock, machinery, or plant replacements are planned, the Stores Department should immediately provide details to the same department about stocks in their possession.
  • The Stores Department should compile a list of spare parts in stock for the equipment being replaced
  • Determine if any of these spare parts are obsolete or if they can be reused for similar equipment.
  • Preparation of a financial statement demonstrating funding needs for disposal and scrapping the material.

Advice to Write-Off Spares

  • Rolling stock, plant, or machinery are being replaced, a "Advice to Write-off Spares" (Form S. 2209, manuscript) is prepared in triplicate for the Controller of Stores.
  • This form should contain a full description of the item being replaced, the relevant particulars such as P.L No, the quantity in stock including details of the quantity, description, value etc.
  • The estimated value of the spares in stock should be included in this form.
  • The estimated sanction, date, signature of departmental officer, and depot officer details should be included.

Advice of No Requirement of Stores

  • If materials are no longer needed for specific works due to changes in design or other reasons, a "Advice of No Requirement of Stores" Form (S. 2213, Manuscript) must be filled out and sent to the Controller of Stores.
  • Include details such as P.L. No., Description of items, value to be filled in by Stores Department and relevant remarks.

Definitions of Surplus Stocks

  • Definition of surplus stock involves a minimum period of non-issuance (typically two years).
  • Movable surplus: items not issued for 24 months, but expected to be used soon.
    • Marked in Price Lists.
  • Dead surplus: items not issued for 24 months, unlikely to be needed within the next two years.
  • Marked in Price Lists after inspection by a Survey Committee.

Emergency Stores

  • Items with immediate use are not considered 'surplus' even if they haven't been issued in two years, such as spare parts for equipment that prevent a failure or breakdown.

Surplus Stock Disposal

  • Procedures to dispose of surplus stores: Include sale, issue to other railways or transfer to government departments.
  • The aim is to regulate and prevent overstocking and maintain effective organizational procedures.

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Description

This quiz covers important procedures for managing surplus stocks in relation to changes in design and standards within manufacturing. It emphasizes the roles of the Controller of Stores and the necessary documentation to minimize accumulation of obsolete stock. Understanding these processes is crucial for maintaining efficient inventory management.

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